Friday, January 29, 2016

GM also sued Chobani, and received an almost identical
preliminary injunction, accompanied by an almost identical opinion, as that in Dannon’s
case, reported earlier.Yoplait
Greek 100 was the other target of Chobani’s campaign.The key difference is the video ad, which “opens
with a woman seated behind the wheel of a vintage convertible, examining a cup
of peach Yoplait Greek 100 yogurt.”Narrator:
“Yoplait Greek 100 actually uses preservatives like potassium sorbate.Potassium sorbate? Really? That stuff is used
to kill bugs!”The woman scrunches her
face in disgust and tosses the Yoplait, replacing it with Chobani “as the
details of a roadside stand packed with fresh racks of produce become visible
in the background.”Voiceover: “Now,
there’s Chobani Simply 100. It’s the only 100 calorie light Greek yogurt with
zero preservatives.”Happy woman
consumes Chobani; camera pans to “reveal a happy child returning to the vehicle
with a bag of produce in hand.” The final
shot includes a hashtag:#NOBADSTUFF.

In the digital content, the Yoplait image is presented with several ingredients
identified as “artificial” in large, red font.Beneath the Yoplait image, the Chobani website describes potassium
sorbate as both “an allowable chemical preservative for foods” as well as an “allowable
minimum risk pesticide product.”

Potassium sorbate is generally recognized as safe by the
FDA.According to the U.S. Department of
Agriculture, “few substances have had the kind of extensive, rigorous, long-term
testing that sorbic acid and its salts [like potassium sorbate] have had.It has been found it be non-toxic even when
taken in large quantities, and breaks down in the body into water and carbon
dioxide.”In food products, it works to
inhibit the growth of mold and yeast, and has been used widely and safely for
decades in food products.It’s also
found in various pesticide products classified as “Minimum Risk” by the EPA and
exempted from certain regulatory requirements.

GM argued that the statement “that stuff is used to kill
bugs” conveyed the literally false by necessary implication message that the
potassium sorbate used in Yoplait Greek 100 rendered it unsafe to eat.Chobani argued that its claims were literally
true, and the rest of its claims were puffery. In context, however, the claims
were literally false.In the context of “no
bad stuff” and the like, the ads painted GM’s yogurt as a safety risk because
it contains potassium sorbate.

Presumption of irreparable harm from literally false
comparative claim applied; even without a presumption, the inference of
irreparable harm was easily made from the same circumstances, especially given
the difficulties of quantifying the harm caused.

Note: After I posted about Dannon’s victory against Chobani,
I got a request from a Chobani PR person to update my story with Chobani’s “statement
and social media post.”In writing about
legal cases, I try to confine myself to what’s in the opinion and,
occasionally, the papers or other publicly accessible sources.When I read the statement/social media post,
I didn’t see any disagreement with the law or the facts, so I don’t think there’s
any reason for me to include Chobani’s press release.

Chobani sued for a declaratory judgment that it wasn’t falsely advertising
about Dannon; Dannon immediately filed its answer and counterclaims, and the
court a bit over two weeks later granted a preliminary injunction against
Chobani.

Dannon Light & Fit is the leading brand of light yogurt
in the US, and Dannon’s top seller.Dannon added Light & Fit Greek as an eighty-calorie Greek nonfat
yogurt.Dannon alleged that its highest
proportion of light yogurt sales routinely occurs during the first three months
of the year, “as this is the time when most American consumers resolve to make
positive changes relating to weight loss, fitness, and overall health and diet.”It’s also the time of year when consumers
experiment with new yogurt products, making marketing and sales efforts during
each year’s first quarter crucial.

Chobani, meanwhile, actively seeks to differentiate itself
from its competitors in the Greek yogurt market by emphasizing its commitment
to “natural, non-GMO ingredients” and “environmental sustainability practices.”Its latest offering, Chobani Simply 100 Greek
Yogurt, has “100 calories per serving with no preservatives or artificial
sweeteners.”Its January 2016 campaign
included a TV ad, a print ad, and digital/social media content, all on the same
theme.

The video ad’s opening shot focuses on a cup of Dannon Light
& Fit Greek Yogurt sitting on a table, which is immediately picked up by a
young woman lounging in a pool chair. As she scrutinizes the ingredients label,
a voiceover proclaims:“Dannon Light
& Fit Greek actually uses artificial sweeteners like sucralose.Sucralose? Why? That stuff has chlorine added
to it!”The woman scrunches her face in
disgust and tosses away the cup of Dannon yogurt.She then chooses Chobani Simply 100 Greek
Yogurt, which is sitting on a table to her right, as a swimming pool becomes
visible in the background.Voiceover: “Now, there's Chobani Simply 100.
It's the only 100 calorie light yogurt sweetened naturally.” “As she tears open
the packaging, the Commercial pans to a wide shot of the swimming pool, where a
child jumps in, making a big splash.The
camera returns to the woman, now smiling contentedly, before finishing with a
wide shot.”The final shot includes a
hashtag: #NOBADSTUFF.

The print ad’s headline is “Did You Know Not All Yogurts Are
Equally Good For You?”It continues, “[y]ou
think you are doing something good for yourself and your family [b]y buying
yogurt and instead of bad stuff [a]nd then you find that the bad stuff* [i]s in
your yogurt!” The asterisk refers to a mouseprint footnote explaining that “bad
stuff” means “Artificial Ingredients.” The text above and below the Dannon
product displayed is the same as that in the ad. Further:“If you want to do healthy things, know what’s
in your cup. Chobani Simply 100 is the only 100-[c]alorie Greek Yogurt without
a trace of any artificial sweeteners or artificial preservatives.”

Print ad

The digital content is similar.The website asks “Do You Know What’s In Your Cup?
. . . . Scroll over to compare our ingredients with those in other light
yogurts to see what’s really inside[.]”Ingredients of Dannon’s product are identified as “artificial,” and the
site has a link to the print ad.

Digital content

Sucralose, which Dannon uses, has been approved by the FDA
since 1999, and Dannon provided evidence that the FDA reviewed more than 110
safety studies in connection with its use as a general purpose sweetener for
food.Sucralose is a molecule with
twelve carbon, nineteen hydrogen, eight oxygen, and three chlorine atoms linked
together in a stable form that is safe to consume.It’s made through a process in which three
atoms of chlorine are substituted for three hydrogen-oxygen groups on a sucrose
molecule.This trio of chlorine atoms is
known as a chloride, that is, a compound of chlorine that is bound to another
element or group. Chlorides are found in many natural food sources, from table
salt to cow’s milk.

Pool chlorine, by
contrast, is a lay term for calcium hypochlorite, “a powerful bleach and
disinfectant that is harmful if added to food or ingested.” It’s distinct chemically
and practically from the chlorine atoms found in sucralose, and it’s not in, or
used to manufacture, any of Dannon’s products.

First, the court ruled that Dannon sought a prohibitory
injunction to return the parties to the status quo ante, rather than a
mandatory injunction requiring affirmative acts by Chobani.Thus, the standard was no higher than that
applied as a result of Winter/eBay.

Likely success on the merits: Chobani argued that it was
literally true that sucralose had chlorine added to it, and that the other
challenged messages about “good” or “bad stuff” were mere puffery.Nope.Although “no bad stuff” might be puffery if it weren’t tethered to a
comparative claim about Dannon, here Chobani used that phrase in connection with
statements and images that portrayed Dannon’s yogurt as a safety risk because
it contains sucralose.Some of the
digital content didn’t give the full comparison, but it did include a link to
the full print ad.

Even if Chobani’s statements about “chlorine” were literally
true, there could still be literal falsity if the clear meaning, in context,
was false.(The court wasn’t so sure
about literal truth.The statement that
chlorine was “added to” sucralose was inaccurate, if sucralose is created by
adding chlorine to a precursor compound; sucralose doesn’t exist until the
chlorine is combined with the precursor, and adding additional chlorine to a
stable sucralose compound would likely have no effect.Chobani’s own expert claimed that it was scientifically
accurate to say “chlorine has been added to form sucralose.”A factfinder is likely to conclude that the
campaign unambiguously conveys the literally false message that Dannon’s
product contains sucralose and is therefore unsafe to consume. Chobani argued
that sucralose’s safety was the subject of legitimate scientific debate, but
the record didn’t support that claim: “the balance of record evidence reflects
that sucralose is an unusually well-studied compound repeatedly determined to
be safe for ordinary consumption.”While
some research suggested that high doses could be toxic, that’s also true of
salt and water.Further, it was “telling”
that Chobani’s own products contained the same type of “chlorine”—the chloride
found in all-natural, non-GMO milk, but Chobani made no mention of that fact.

Dannon was entitled to a presumption of irreparable harm given
the literally false direct comparative advertising at issue.Even if such presumptions are illegitimate
because “categorical” in a way precluded by eBay,
Dannon still showed irreparable harm.Given the difficulty of showing how many sales or how much goodwill
would be lost, it was enough to show (1) competition in the relevant market and
(2) a logical causal connection between the alleged false advertising and the
claimaint’s own sales position.That’s a
no-brainer here.

The balance of hardships also favored relief, since Chobani
has no protectable interest in advertising falsely.And barring false advertising is in the
public interest, especially when it comes to serious issues like food safety.

The parties agreed on a $1 million bond, which the court
accepted. The injunction blocked the existing ads, as well as similar claims
related to chlorine content, healthfulness because of the presence or absence
of chlorine, the presence of pool chlorine in Dannon yogurt, the danger of
sucralose, the lack of safety of Dannon products, or “bad stuff” in connection
with Dannon products.

Thursday, January 28, 2016

Here. No love for an exception for noncommercial user-generated content (Canada's YouTube exception), but at least some support for the viability and importance of fair use, including discussion of the OTW's contributions. What is a bit aggravating is the apparent belief that, because the noncommercial/commercial barrier is permeable, it is therefore of little significance to policy--after all, some noncommercial users might grow up to be professional artists in the field in which they first made noncommercial remix, meaning ... what, exactly? That art students copying Picassos in the art museum should be licensed and paid-for, because it encourages the development of capabilities that are later employed in for-profit endeavors? That the person who writes Star Wars fan fiction and later writes NYT-best selling novels about dragons should kick back some money to Disney? Look, even my alma mater recognizes that it's only entitled to ask for some of my earnings now, despite its contributions to my capacities (such as they are). That is, the observation "the noncommercial/commercial barrier is permeable," mostly with respect to creators but occasionally with respect to specific works, doesn't entail any inability to identify when a particular activity is commercial or noncommercial, or any reason to disregard that status. And there's a lot of reason to treat activities that are noncommercial differently because of the different ways that people behave, reason, and learn in noncommercial spaces, even if some of them later take the skills they developed and make commercial art.

(The White Paper does formally disavow any value judgment as between amateurs/professionals, but its implicit assumption that the natural arc of the amateur is to aspire to professionalism is understandable only in a context that expects or demands monetization to identify value. I imagine all the drafters have some hobby or other that they engage in--singing in a choir, knitting for friends, telling stories to children--that they never plan to monetize. Is their development stunted? Or are they making choices about pleasure and nonmonetizable value that law should do its best not to squelch? I know where my money, so to speak, is.)

Tuesday, January 26, 2016

This long-lived dispute goes another round of various
motions in limine.Innovation sued NVE
for trademark infringement; NVE counterclaimed for false advertising.Here, the court applies Lexmark to resolve disputed questions around trademark ownership, and
decides that the jury will hear all the evidence and render an advisory verdict
about the equitable issues, because the false advertising counterclaim and
unclean hands defense to trademark infringement are so intertwined.

NVE sought to present its unclean hands defense to the jury;
Innovation sought to prevent NVE from presenting evidence about unclean hands
to the jury and to bifurcate the trial.The unclean hands evidence was: (1) Innovation’s allegedly improper
registration of domain names using NVE’s 6 Hour POWER name, including
www.sixhourpower.com and www.6hourpower.com; (2) Innovation’s alleged efforts
to keep NVE’s products off the retail shelves; (3) Innovation’s alleged opposition
to NVE’s application to register “6 Hour POWER” with the PTO; and (4) Innovation’s
publication and distribution of a “Legal Notice” which NVE claims mislead
retailers into removing NVE’s products from the shelves because it over-broadly
identified the products against which Innovation had obtained an injunction. (Similarly named products from a different producer.)

Innovation wanted to try its trademark infringement claim to
the jury first, without allowing the jury to hear any evidence about false
advertising or unclean hands.Innovation
argued that the false advertising claim would be moot if Innovation won because
NVE would have had no legal right to sell an infringing 6 Hour POWER product in
the first place. And if Innovation lost, anyunclean hands evidence would be irrelevant, though a second trial could
be held on false advertising.NVE
pointed out that this would let Innovation put its best case forward, and not
allow NVE to provide a full defense.

The court decided that all the legal and equitable issues
would be presented to the same jury, and the jury would be instructed to return
advisory verdicts on the factual questions related to the equitable claims,
with the final decision on the equitable issues being reserved to the Court. While Innovation argued that unclean hands
evidence would be unduly prejudicial, many factual questions were common to the
legal and equitable claims, requiring their presentation to the jury.The unclean hands evidence largely overlapped
with the false advertising counterclaim.Moreover, the jury would be aided by a “full presentation of the real
circumstances that surrounded how these parties acted in competition with one
another.” Evidence of Innovation’s alleged efforts to get retailers to remove NVE’s
products from store shelves “could indicate a concerted effort on behalf of
Plaintiff to drive Defendant out of the market.”

Innovation’s concerns about prejudice were not dispositive
because some of the evidence—that relevant to false advertising—“is rightfully
before the jury and prejudice arising therefrom cannot be considered unfair
prejudice.” Any additional risk of prejudice from the less serious unclean
hands evidence could be avoided by carefully instructing the jury, and didn’t
outweigh NVE’s right to a jury trial and the needs of judicial efficiency.

Innovation did win confirmation of its standing.Previously, NVE argued that Innovation didn’t
own the underlying trademark when it sued.NVE argued that it learned during discovery that a separate company may
have owned the 5 Hour ENERGY trademark when the case was filed, and the court
agreed that it appeared that, at some point in time, this separate entity was
in fact the owner, and Innovation had only a nonexclusive license.

However, Innovation sued under §43(a), and argued that it
didn’t need to own a mark to pursue its claims as long as it showed it was
likely to be harmed by infringement.(It
also argued that, by subsequent agreement with the third party, it became the
owner nunc pro tunc of the trademark, but the court didn’t reach that argument.)The court agreed that Innovation adequately
alleged sufficient commercial interest in the mark to have standing under Lexmark.(Sorry, Justice Scalia. Until you give us another simple name for it,
it’s standing.)

Under § 43(a), “any person who believes that he or she is or
is likely to be damaged” may bring a claim for infringement resulting from
false association or false advertising, “without regard to any ownership
interest the plaintiff may have in the trademark.” This means that manufacturers, competitors,
distributors, and others may have standing if they satisfy Lexmark, which the court characterized as setting the standard for
“whether a non-owner plaintiff has standing to raise a claim under § 43(a).”

Innovation fell within the zone of interests protected by
the Lanham Act—its interests were those of a person engaged in commerce, with
commercial interests in reputation or sales at stake, and not those of a mere
deceived consumer.NVE couldn’t defend
by arguing that a third party had superior rights; such a jus tertii defense is
disfavored in trademark law.Moreover,
Innovation alleged proximate cause: that the introduction of NVE’s allegedly
infringing product resulted in lost sales and association with a competing
product.

Mostly a personal jurisdiction ruling in this
copyright/patent infringement/false advertising case brought by Kindig, which
customizes hot rods.Creative Controls,
which customizes vehicles for accessibility purposes, is a Michigan corporation
with no place of business, property, employees, etc. in Utah.Creative Controls did have a website allowing
Utah residents to order; it donated a custom parking brake for use on a car
Kindig was customizing in Utah; it sold a single door handle to a Utah
customer; and it allegedly copied photographs and contents from Kindig’s Utah-based
website.(In return for the donated
brake, Kindig sent Creative Controls a disk with photos of the finished car,
and a letter indicating that it could use the photos for promotional purposes;
these are among the allegedly copied photos at issue.)The door handle was ordered by a Kindig
employee’s relative, and the parties agreed that personal jurisdiction could
not be based on this plaintiff-generated contact.

The court found that it didn’t have personal jurisdiction
over Kindig’s patent claims, but did have personal jurisdiction over copyright
and related claims.The court further
held that the patent claims weren’t so related as to justify the exercise of
pendent personal jurisdiction.Among
other things, the court rejected the Zippo
website jurisdiction test as incompatible with modern internet practices,
holding that traditional tests were readily applicable to internet-based
conduct.As the court pointed out, many now-ubiquitous
interactive features didn’t exist in 1997 when Zippo was decided, and also the
presence of intermediaries such as Facebook makes it hard to figure out how to
judge the “interactivity” of something like a Facebook page related to the
defendant’s own activity.Moreover, the
traditional purposeful availment test doesn’t require that the purposeful
availment be for commercial purposes; without that limit, pretty much everybody
looks like they’re personally availing themselves of pretty much any
jurisdiction under Zippo.

The allegedly infringing copying of Kindig’s photos from its
Utah website, however, gave rise to personal jurisdiction over Creative
Controls on all claims related to the alleged copying.Kindig sufficiently identified the works at
issue by including copyright registration information and date of first
publication.By alleging that Creative
Controls’ website “contains photographs of customized automobiles which [sic]
are nearly identical to [the copyrighted] photographs of customized automobiles
found on the Kindig website,” the complaint provided sufficient notice of the
allegedly infringing works, even if it didn’t otherwise identified them.

Likewise, Kindig sufficiently pled false
advertising/deceptive trade practices.Creative Controls argued that the claims should be dismissed because the
photos weren’t materially misleading: it was implausible that any differences
in door handles displayed in photos of cars and actual Creative Controls door
handles would be material to consumers, given the small size of the
photos.But the court found that it was
plausible that consumers would be influenced by the photos.“Indeed, the reasonable inference is that
Creative Controls included the photographs of the unique customized cars with
the very intent of influencing potential customers.”

Nor would the court dismiss unjust enrichment or conversion
claims as preempted at this stage.And
here the court just errs: it said that, because some of the photo copyrights
might be invalid, unjust enrichment and conversion claims might not be
preempted if based on invalid copyrights.But that’s backwards under §301, which was specifically designed to
prevent claims replicating the subject matter of copyright, whether or not the
work (or idea/fact) at issue was copyrightable.It should be immediately evident that §301 applies to an unjust
enrichment/conversion claim based on copying a work in the public domain due to
expiration of federal copyright protection; so too here.(And that’s setting aside the issue that,
even if a registration is invalid for some reason, the copyright still exists if the work is copyrightable.Only the details of federal
jurisdiction/availability of certain remedies turn on the validity of the
registration.)

The court did hold that Kindig failed to state a claim for
fraud.There were no facts indicating
Creative Controls defrauded Kindig; a
fraud on the public at large didn’t allow Kindig to sue, and Kindig didn’t
allege it acted in reliance on Creative Controls’ misrepresentations.

Defendants moved for a preliminary injunction on their
counterclaims involving dietary suppplements.Defendant Axcess is the exclusive licensee of patented technology
relating to

appetite suppression and weight loss. Defendants alleged that a prospective
sub-license to Pruvit never became effective, while Pruvit argued that it was
approved.Pruvit went to market with a
supplement called KETO//OS1, allegedly using defendants’ patent and trade
secrets, while defendant ForeverGreen then launched a competing supplement,
KetonX.Pruvit sued defendants for
breach of contract, disparagement, and related claims.Defendants counterclaimed for, among other
things, trade secret misappropriation, patent infringement, and false
advertising.Defendants sought a
preliminary injunction, and the court analyzed irreparable harm in detail,
assuming arguendo that they’d shown likely success on the merits.

Speculation isn’t enough to show irreparable harm.The movant must show that monetary damages
are an insufficient remedy and that their alleged harms are not just possible,
but likely. The judge reviewed six theories of harm, none of which worked.

Price erosion: Pruvit’s product allegedly caused price
erosion in the relevant supplement market, and defendants might be forced to
drop the price of KetonX to compete.Further, customers would resist future price increases, so ForeverGreen
wouldn’t then be able to raise the price without destroying goodwill.Price erosion isn’t irreparable harm; money
damages can compensate for it.Plus, the
testimony was merely speculative, with no economics expert or other expert
testifying to it.

Reputational harm: although this can be irreparable harm, “the
showing of reputational harm must be concrete and corroborated, not merely
speculative.” Defendants argued that Pruvit’s supplement had negative side
effects, such as headaches, diarrhea, and nervous system issues, and that such
problems were likely to be attributed to KetonX or ketosis supplements
generally because the products are seen as alternatives.But they failed to show that the established
negative side effects of Pruvit’s KETO//OS were causing customers to turn away
from KetonX and/or the ketosis supplement market, or that KetonX didn’t also
cause the side effects alleged.The
court agreed that “[i]t is difficult to imagine under what extraordinary set of
circumstances the introduction of a product with a ‘lower reputation for
quality’ would, instead of highlighting the higher quality of its competitors,
reflect adversely upon the field as a whole.” Moreover, the Fifth Circuit previously
held that “[t]he lost goodwill of a business operated over a short period of
time is usually compensable in money damages,” and both products had only been
on the market for about six months.

Harm to shareholder value: There were other explanations for
a decline in share value, like ForeverGreen’s losses in 9 out of 12 fiscal
years, and mere speculation wasn’t enough, nor was alleged temporal proximity
between Pruvit’s launch and the decrease in value.

Lost market share/first-to-market advantages: Defendants
argued that, in the multilevel marketing model both parties used, being first
to market was extremely important, because a new product launch creates
significant interest in the industry and attracts distributors excited to take
the new product to market, maintaining a larger market share than would
otherwise exist. Moreover, Pruvit’s presence in the market also limited the
supply of raw materials necessary to manufacture KetonX, prevented defendants
from making important industry contacts/acquiring important distributors, and
deceived consumers through false labeling.

Lost market share/lost sales aren’t irreparable harm in
themselves.Moreover, lost market share
must be substantiated, and here all defendants did was claim that they must
have lost market share, without quantifying it or establishing that it had
happened. “[N]either the difficulty of calculating losses in market share, nor
speculation that such losses might occur, amount to proof of special
circumstances justifying the extraordinary relief of an injunction prior to
trial.”

Lost opportunities to obtain raw materials: there was no
evidence that Pruvit’s supplier was the only supplier.Nor did the evidence show that Pruvit was to
blame for lost distributors, or that Pruvit’s labeling had turned customers away
from the ketosis supplement market as a whole.

Lost profits: these are readily quantifiable and thus not
irreparable.

Lost right to exclude: Also not irreparable, especially
given that defendant Axcess, at least initially, voluntarily began a sublicense
agreement.

Defendants’ five-month delay in seeking relief also weighed
against a finding of irreparable harm; they even delayed two months after
Pruvit sued them to counterclaim, weighing heavily against a finding of
irreparable harm.

David Shields recently published War Is Beautiful: The New York Times Pictorial Guide to the Glamour of Armed Conflict. The argument of the book is that the images chosen by the Times to decorate its front pages glamorize and glorify war. Agree or not, it is at least an argument, and Shields even licensed the full-size pictures in the book from the Times. However, the endpapers of the book as published show thumbnail images of the front pages of the editions from which the full-size photos come, and the publisher didn't license the front pages. The Times has, quite unwisely, sued over this textbook (coffee-table book?) fair use.

Endpapers to War is Beautiful

Let's review: Factor one, purpose of the use: images contextualizing the main argument of the book, which involves the overall aim of the Times, not just the photos in isolation but their presentation by the paper. That's classic historicization and commentary: transformative use under Dorling Kindersley. Nature of the work: already published, favoring fair use; news photos and news stories, even if creative, are highly factual, though that doesn't matter much in transformativeness cases. Amount taken: The Times apparently claims a copyright in the layout of the front page, but really the work would have to be that day's print edition, meaning that the book reproduces a fraction of the work, although qualitatively perhaps more important than an average page. But the real kicker, of course, is size. Much more than in Dorling Kindersley, where you could at least read most of the text in the images, there's no way anyone could read the chunks of news stories at issue here. Size cuts decisively in favor of fair use. Market effect: the Times isn't entitled to any market for transformative uses, even if there were some market for unreadable thumbnails.

It's hard not to look at this lawsuit as the reaction of a paper embarrassed at having licensed photos for what turned out to be a work of harsh criticism. Whether that criticism is justified or not (and whether licenses were even required, or sought only to avoid a legal battle), the once-Grey Lady looks unappealingly thin-skinned. I would point out that fees are available to prevailing copyright defendants, and no matter what happens in Kirtsaeng the law is clear enough here that this is a good case for such an award.

Friday, January 22, 2016

Interesting little case that doesn’t mention Dastar, but is a rare application of the Dastar principle that reverse passing off can be actionable as false advertising under appropriate circumstances, which these might be.
Plaintiff alleged both trademark infringement and false advertising based on its contention that its Outrigger word mark was “buffed off” of test tires used by defendant in China. The court correctly granted reconsideration of its initial holding that this allegation raised a genuine issue of material fact as to infringement. The word mark was allegedly removed before the goods were shipped in commerce (which wouldn’t matter anyway, under Dastar). Moreover, a reference to “Outrigger” in email wasn’t infringement. However, there was a genuine issue of material fact whether defendants falsely represented to a customer that the test tires were their own tires when in fact, they were Outrigger tires, in order to get the customer to choose defendant over plaintiff. As a result, there was a viable false advertising claim even without an infringement claim. (“Commercial advertising or promotion” might be the big remaining barrier.)

Thursday, January 21, 2016

The AG alleged violations of NY state consumer protection
law, including a law specific to magazine subscription sales, involved here.Respondents send official-looking
solicitations that allegedly misled consumers into thinking they came from the
publications themselves.On the left
side, they contain four boxes, containing numbers, labeled: “Control Number,”
“Please Return By,” “Installment” and “Total Amount.” Near the four boxes are
(1) a publication’s name and (2) a phrase suggestive of billing, such as
“Magazine Payment Services,” “Publishers Billing Exchange,” “Publishers Billing
Center,” “United Publishers Service,” “Magazine Billing Network,” “Publishers
Billing Association,” “Subscription Billing Service,” “Publishers Billing
Center,” or “Subscription Billing Service.” The right side of the solicitations
typically contain the same four boxes under a heading of “Notice of Renewal,”
and again with the publication’s name printed underneath the boxes.Here is an example of at least a similar
invoice I found at the URL http://www.phgmag.com/docs/phgfraudinvoice.pdf:

“Respondents, which typically do not have authorization to
act as agent for the various publications, charge significantly more for the
subscription than the publications themselves charge and retain the difference.”
In addition, the State alleged that that respondents, when soliciting for
renewal subscriptions, failed to disclose the date that existing subscriptions
end, as required by New York law.

Respondents argued that any confusion about whether the
solicitation was made by the publication itself was not their fault.The back of the solicitations said: “We offer
over 600 magazines as an independent subscription agent between magazine
publishers and clearinghouses in order to facilitate sales and service. As an
agent we do not necessarily have a direct relationship with publishers or
publications that we offer. . . ..”

Respondents also argued that the court lacked
jurisdiction over the individual respondents and respondent Adept.The state argued that Adept’s exclusive
business was providing support to the other corporate respondents: bookkeeping,
data management, consumer mail processing, and consumer refund processing. Adept
denied any involvement in consumer complaint handling or control over the
content of the solicitations, though Adept made some suggestions after an
investigation by the Oregon AG.(Adept
is located in Oregon.)

The court found jurisdiction over Adept and its principal:

From a technical view, Adept has
been careful not to project itself into New York or to transact business here.
From a practical view, it is hard to deny that Adept, albeit indirectly, has
availed itself of the benefit of New York consumers, as the record shows that
Adept’s reason for being is to support and facilitate the solicitations that
are the subject of this proceeding. The record also shows that all of Adept’s
profits flow from these same solicitations.

Although Adept’s contacts with New York were through the
mail and sent by sister entities, together the respondents formed a single
business model.The sister entities were
owned by a New York LLC, and thus Adept availed itself of New York law.Further, the record showed that Adept processed
the mailing addresses, payments, and refunds of New York consumers, and also
has some role in the content of the solicitations sent to New York consumers.

There was no constitutional problem with asserting
jurisdiction because these acts constituted minimum contacts with New York, and
Adept received its revenue from a company organized under New York law. Adept could
reasonably expect to be brought before a New York court if those solicitations
violate New York law.

General Business Law § 335–a[4] provides, in relevant part,
that:

Any person, firm, association or
corporation engaged in business, the principal purpose of which is to regularly
solicit magazine subscription orders for delivery in this state through the
mail for profit shall, in any direct written communication to a magazine
subscriber inviting the subscriber to renew a subscription, clearly,
conspicuously, understandably and readably: a. disclose the month and year in
which the subscription expires ...

There’s an exception for good faith errors made despite the
existence of procedures designed to avoid such error. Respondents challenged
the law as a violation of substantive due process.(Not the First Amendment?)But the law had a rational basis, even as
applied to independent subscription agents with no relationship with the
publishers (if not more so!).Excluding
non-profits from the regulation was rational.Nor did the state instead have to rely on publishers printing an
expiration date clearly on all publications sent to subscribers, allowing
consumers to cross-reference those publications when they received
solicitations.The state’s consumer
protection purpose was legitimate and rationally related to the
regulation.That it might preclude
respondents from sending solicitations to New York was not of constitutional
moment.“The Legislature has made an
implicit judgment that if a subscription agent does not know when a consumer’s
current subscription ends, it cannot solicit that consumer for a renewal.
Making that judgment is within the Legislature’s authority.”

General Business Law §§ 349 and 350: Deceptive acts or
practices/false advertising.The
solicitations were clearly consumer-oriented, as required, and at least raised
a fact question about misleadingness.On
their faces, the solicitations looked like they were sent directly from
publishers, which could cause consumers to believe that they were being offered
a standard price from the publishers, rather than a substantial premium
(sometimes nearly twice the publisher’s rate). Nonetheless, the disclaimer on
the back raised a fact question about whether a reasonable consumer “would have
taken the time to read it and learn that the solicitations were not being sent
by publishers and that the cancellation policy may be more draconian than the
ones offered by publishers.”

In SanMedica v. Amazon, the court initiallyfound enough evidence of confusion from Amazon’s continued use of a
trademark in keyword ads (after it had kicked the seller off its platform, but
continued to offer competing brands) to deny summary judgment.However, the court’s initial opinion redacted
the percentage of consumers who saw the Amazon ads and clicked through, and the
percentage who bought something after clicking through, which meant that it was
impossible to understand how the court had applied the governing 1-800 standard, which holds that
clickthroughs provide an upper bound on possible confusion.With
the able assistance of Public Citizen, I intervened, and we ultimately
agreed to remove a significant amount of the redactions in the opinion and the
underlying documents.I’m pleased to be
able to bring you the crucial paragraph in the opinion:

In the present case, there is
similar evidence setting an upper limit on how often consumers were lured to
Amazon’s website by clicking on the sponsored ads. It is undisputed that during
the Advertising Period, approximately 319,000 sponsored ads were generated. Out
of those, there were approximately 35,000 clicks on the sponsored ads. The
click to impression rate of the sponsored ads is approximately 11 percent. This
rate sets the “upper limit on how often consumers really were lured in such a
fashion.” Amazon contends that of the “35,253 users that clicked on the ads for
SeroVital, only 984 made any purchase at Amazon.com, a measly 3 percent.”
Although consumer purchases constitute three percent, the focus is not on the purchase
rate but instead on the 11 percent rate that consumers were lured to Amazon’s
website. Eleven percent, although a relative small number, is not so
insufficient to suggest that there was no likelihood of confusion.

Trademark law takeaway: not great from a traditional
perspective—11% as an upper bound is really low, when 15% is a more normal breakpoint.However, given what’s known about
clickthrough rates, most non-Amazon keyword advertisers can probably breathe a little
easier.

Wednesday, January 20, 2016

Found this one in another search and was fascinated.After the death of Rabbi Menachem Mendel
Schneerson (the Rebbe), a religious dispute divided the Chabad Lubavitch
community. Counterclaim defendants Vaad L’Hafotzas Sichos, Inc. (Vaad) and
Zalman Chanin held the belief that the Rebbe is the Messiah and still lives. One
result was a lot of copyright and trademark lawsuits.The court previously upheld the PTO’s
registration of the Kehot Publication Society logo by Merkos L’Inyonei Chinuch
(Merkos).

The court then conducted a bench trial about whether Vaad’s
use of the logo, which it did on all its publications, infringed Merkos’ trademark
rights and caused dilution under New York law.Apparently, “Merkos would have no objections if Vaad did not omit the
appellation “of blessed memory” after references to the Rebbe’s name—which is
contained in Merkos’s publications. Vaad does this consistent with its belief
that the Rebbe is the Messiah and still lives.” Merkos didn’t want to be
associated with Vaad’s messianic belief and thus sought an injunction.

Rabbi Joseph I. Schneersohn founded the Kehot Publication
Society, then established Merkos to provide broader educational services to the
Lubavitcher community. In 1942, Merkos took over direction of Kehot, an
unincorporated entity, and affixed the Kehot logo to almost all its
publications. During Joseph I. Schneersohn’s tenure, several entities used the
Kehot logo, some part of Chabad Lubavitch’s umbrella organization and others independent.
All uses of the logo were contingent on Schneersohn’s approval. This practice
continued when the Rebbe succeeded the previous Rebbe in 1951.

Vaad was formed in 1967 to centralize the publication and
distribution of the Sichos (talks or sermons by the Rebbe). From then through 1994, Vaad submitted its
weekly pamphlets to the Rebbe, upon which Vaad would publish and distribute the
pamphlets under the Kehot logo. In 1994,
the Rebbe died, but Vaad did not include the “of blessed memory” appellation in
its next publication.Members of Merkos’
board sent a letter to Vaad chastising it for doing so, and Vaad used the
appellation for about a year, but then resumed publishing without it. Merkos protested again in 1995, but Vaad did
not stop its practice.

In 2001, Merkos applied for a registration of the Kehot logo
as a trademark for use on “books, magazines, charts, maps, and photographs on a
variety of aspects of Jewish life.” The TTAB dismissed Vaad’s opposition in 2010.The court affirmed Merkos’ ownership in a prior
opinion; in a footnote, it noted that, even had it disagreed with the TTAB, B&B v. Hargis would likely have
required it to apply preclusion to the TTAB ruling.

Strength of the mark: Conceptually strong (“an original
image and … thus fanciful and inventive”) but commercially weak, because it was
and continued to be used by numerous entities other than Merkos in the
production of books for sale in the Hasidic community.Thus, the logo didn’t provide strong source
identification for Merkos. (But apparently strong enough to be more than merely
descriptive?)Weighed against confusion.

Similarity: the logos were identical, favoring a confusion
finding. So did the proximity of the products
and their identical quality.The books
were identical except for the omission of the appellation after the Rebbe’s
name in Vaad’s publications, and Vaad and Merkos targeted the same market, the
Hasidic community.

Actual confusion: Merkos provided emails from prospective
customers to the Kehot customer service email address asking questions related
to books published by Vaad. E.g.: “I’m interested in purchasing the likutei
sichos parshios from you but I don’t see it online do you have it in stock?”But the authors didn’t testify, and the court
didn’t know why they believed that Merkos published Vaad publications.It was possible that confusion stemmed from
the logos, but also possible that confusion stemmed from the high similarity of
the parties’ books.For example, while
Merkos does not offer the Likkutei Sichos organized by parsha (weekly Torah
portion), Merkos does publish the Likkutei Sichos. Moreover, Rabbi Mendel Sharfstein testified
that individual members of the Hasidic community are “reluctant to interact
with [him] and the activities that [he is] involved in for Merkos,” if they
think Merkos believes the Rebbe is the Messiah. But the internal dispute about
whether the Rebbe is the Messiah “is well-known throughout the Hasidic
community, and it is likely that individuals in the community would inquire as
to Merkos’s beliefs regardless of whether Vaad used the Kehot logo.”Weighed against confusion.

Bad faith: Vaad’s continued use of the logo after Merkos’ protest
was not in bad faith; the letters indicated that Merkos objected to the
omission of the appelation, but didn’t demand that Vaad cease publishing under
the Kehot logo. “Considering Vaad’s longstanding permission and practice to
publish under the Kehot logo, Vaad’s disregard of Merkos’s instruction to
include the appellation does not necessarily establish that from that point
forward it was intentionally infringing upon Merkos’s trademark.”Plus, Vaad believed that the Rebbe granted it
permission to use the logo and that Merkos didn’t have the authority to revoke
that permission. While that was wrong as a matter of law, it was not a decision
made in bad faith.

Consumer sophistication: Merkos’ witness “candidly” admitted
that “those who are interested in the Hasidic life” are aware of the present
litigation and that there “are many savvy enough” in the community to recognize
the difference between a Vaad and Merkos publication. Didn’t favor confusion.

On the whole, the multifactor test weighed against finding
likely confusion.The court weighed the
commercial weakness of the mark—its use by numerous publishing organizations
since the 1940s—heavily, as well as the lack of convincing evidence of actual
confusion despite unauthorized use of the logo for over 20 years.

Even if the court had found likely confusion, it would have
also found laches.Vaad was entitled to
a presumption of laches (using the analogous limitations period of New York’s six-year period for fraud claims). Merkos
delayed for 17 years before asserting infringement counterclaims, a delay that
was not reasonable under the circumstances.Vaad didn’t change the extent of its alleged infringement by, in 1998,
changing the title page of Vaad publications from “Published and Copyrighted by
‘Kehot’ Publication Society” to “Published and Copyrighted by Vaad L’Hafotzas Sichos.”
“[I]f anything, clearly identifying a
book as being published by Vaad could only help reduce consumer confusion.”Nor were occasional
communications/negotiations during the period between the 1995 letter and the
2001 litigation sufficient to excuse the delay.Finally, bad faith didn’t disentitle Vaad to laches because Vaad acted
in good faith when it continued to publish under the Kehot logo “in a manner it
believed was consistent with the Rebbe’s directives.”

These findings also doomed Merkos’ unfair competition claims
under New York common law and New York General Business Law § 349 fail.

As for dilution under New York General Business Law § 360–1,
New York applies dilution only to those marks “which are truly of distinctive
quality or which have acquired a secondary meaning in the mind of the public.”
The Second Circuit has held held that the statute “protects only extremely
strong marks.” Here, the numerous entities using the mark prevented the court
from finding that the logo was an extremely strong mark.

I am pondering this question as I contemplate writing my massive "why you should do wooden jigsaw puzzles" post, because of the exception for pictures of useful articles that incorporate expressive works. If I want to show some representative pictures, some of my best puzzles use images still within their terms of protection, and while I have full confidence in fair use, it's also worth considering whether the copyright owner's rights would be implicated even without fair use. (Bonus round question: does a disassembled jigsaw puzzle, with all the pieces turned up, have "fragmented literal similarity" to the full image?) I think the answer ought to be that a puzzle is a useful article, because assembling a puzzle is not merely a representation of the thing depicted (the way a toy airplane might be). Indeed, the puzzle has utility, though perhaps less saleability, even without the image--there are image-less puzzles for people like me who like a particular kind of challenge.

Other questions of interest: is the jigsaw pattern itself a copyrightable work? When hand-cut, there's a strong argument for that, and depending how laser cutting is done, perhaps also for laser-cut patterns. What about when the pattern is created by a computer program? This last question, at least, has generated a fair amount of attention in the legal literature.

Tuesday, January 19, 2016

Fuel dispensing filters are designed to detect and remove
water from fuel before fuel is dispensed into a vehicle. Champion and CIMCO are
the leading competitors in the market for fuel dispensing filters in the United
States. Champion sued CIMCO for false advertising, and CIMCO counterclaimed for
false advertising. Here, the court
dismissed some counterclaims and allowed some to proceed.

The first challenged claim was on Champion’s website: “Only
PetroClear filters are rigorously tested in the world’s most extensive
dispenser-filter research-and-development facility.” CIMCO argued that no
industry-recognized organization, group or association had confirmed this
claim, while CIMCO’s filters “have been tested and recognized by an independent
or third party facility, Underwriters Laboratories.” Champion argued that its claim was
puffery.However, given the relevant
market and the detail in the statement, the claim didn’t warrant
dismissal.Because UL does test filters,
“purchasers might misunderstand Champion Laboratories’ statement … as
trumpeting accolades it received from a third-party or independent organization
for PetroClear filters.”

Second claim: Champion stated that an independent testing
lab, Southwest Research Institute, found that PetroClear filters “stop” the
flow of contaminated fuel when, CIMCO alleged, the lab only found that
PetroClear filters “slow” the flow of contaminated fuel. Champion made the statements in a video on its
website, a May 2006 advertisement in National Petroleum News and, a 2009
presentation to the Petroleum Equipment Institute. Borrowing the 3-year limitations period from
the analogous state statute, the Illinois Consumer Fraud and Deceptive Business
Practices Act, the court found that the continuing violation doctrine
nonetheless rendered the claim actionable, at least on the present factual
record.The related laches defense was
not amenable to resolution on a motion to dismiss.

Third claim: An email addressed to “Gilbarco and Wayne
Authorized Distributors in Latin America,” repeated the “stop flow” statement
and made other allegedly false claims. Champion argued that this email,
directed to distributors in Latin America, didn’t trigger the Lanham Act or the
Illinois Deceptive Trade Practices Act. (Under the Illinois Deceptive Trade Practices Act,
the circumstances that relate to the disputed transaction must occur “primarily
and substantially in Illinois.”) The
court granted the motion to dismiss because CIMCO didn’t show any effect on US
commerce. There was no allegation that the allegedly false statement affected
sales anywhere in the United States or its territories, or that CIMCO suffered
injury in the United States market.

I also signed on to an amicus
supporting Samsung’s petition for cert, both on the damages and the
infringement/functionality standard.This Recode
story marks the first time I can recall being asked if I had a financial
interest, though it shouldn’t be the last (and might not be the first).For what it’s worth, I own shares in various
index funds and a few specific stocks, but not Samsung, and nobody funds my
research but Georgetown.

Friday, January 15, 2016

A lot of stuff going on here. The parties compete in the
market for adjustable air beds and related products. Select Comfort has a
market share of over 90% in the adjustable air bed market.It has registrations for “Sleep Number,”
“Select Comfort,” and “What’s Your Sleep Number.” Defendant Comfortaire is the second largest
market participant; Baxter developed its online advertising.It used Select Comfort’s marks as search
terms in AdWords, as did defendant Personal Comfort.

A consumer who clicked on a Personal Comfort link would see
this comparative ad:

Personal Comfort’s logo is at the top of the page, beneath
which smaller text reads “Compare Us to Sleep Number Bed®,” then “PREFERRED
OVER SLEEP NUMBER® BED.” On the left side under the bold “Compare” heading, it
reads “vs. Sleep Number’s®.” Another bold heading: “The Sleep Number® Bed
versus Personal Comfort® Bed Comparison.” Lower on the page (not shown in the
screenshot), there is another link to “Compare to Sleep Number®,” and the
following: “We invite you to do your homework and check out the competition.” At
the very bottom of the webpage, there’s also a disclaimer of any affiliation
and a link: “No affiliation exists between Personal Comfort® or Sleep Number
Bed®. No product belonging to Select Comfort® or Sleep Number Bed® is sold on
this site and any reference is for comparison purposes only. Select Comfort®
and Sleep Number Bed® are registered trademarks of Select Comfort® Corporation
you can visit them at www.sleepnumberbed.com.”

In addition, Select Comfort argued that defendants used its
marks in phrases such as “Sleep Number bed” and “Sleep Number Beds on sale” in
hyperlinks on third-party sites leading to Personal Comfort’s website. Further, Select Comfort objected to various
uses on the Personal Comfort site, including, for example, the use of “Sleep
Number Bed” in the title tag of the Internet Explorer tab; the use of meta-tags
on Defendants’ websites; and the use of “WHAT’S YOUR NUMBER?” “Number Bed” also
appears in the Personal Comfort logo:

Somewhat differently, Select Comfort objected to defendants’
use of a “lead generating” website, Mattress Quote. The Mattress Quote website
was created by defendants Baxter and Stenzel, and it allowed consumers to
obtain quotes on a number of brands, including Sleep Number and Comfortaire
products. Though it was billed as an
independent website, Select Comfort submitted evidence that when consumers
selected either Sleep Number or Comfortaire, they received a quote from defendants.
Select Comfort also submitted evidence that, in responding to a direct inquiry
from the Mattress Quote website, defendants responded purporting to be “Sleep
Number.” Select Comfort also submitted
evidence that defendants made allegedly false statements to consumers who
visited defendants’ website, called, or participated in a live chat.

The court found issues of material fact as to whether “Sleep
Number” and “Number Bed” were protectable marks, descriptive, descriptive with
secondary meaning, generic, or even suggestive (Sleep Number seems
non-suggestive for beds that are adjustable—I may not know exactly what it is,
but I immediately know there’s a range).Similarly, there were fact issues as to whether defendants engaged in
descriptive or nominative fair use.And
there were fact issues on likely confusion, with some factors favoring each
side and some contested.

Notably, the court held that it was inappropriate to use
initial interest confusion in this circumstance, where the products are
expensive (the average Select Comfort bed costs between $1,600 and $2,300) specialty
products purchased online. “These factors lead to the conclusion that consumers
would exercise a high degree of care in purchasing such a mattress. Therefore,
Plaintiffs’ trademark infringement claim will require Plaintiffs to establish a
likelihood of actual confusion at the time of purchase.”This mattered in part because most of Select
Comfort’s confusion evidence, according to defendants, involved only post-sale
mistakes/confusion, and because the key question in Select Comfort’s survey
didn’t test for source confusion (again, according to defendants).Defendants’ own survey showed only 1.5%
confusion regarding the source or affiliation of their ads.

On the false advertising claims, defendants argued that
Select Comfort lacked standing.It didn’t,
because it had a sufficiently close connection to the asserted false
advertising under Lexmark, so this
serves mainly as a reminder that Justice Scalia has lost the war on calling
this inquiry “standing.”The other
aspects of the falsity claim were contested and had to go to a finder of fact.

The court likewise found that a jury would have to decide
whether “Sleep Number” and “What’s Your Sleep Number?” were famous under the
rigorous federal dilution standard.Select Comfort submitted that they had spent over $150 million in 2014
and over $1 billion since 2010 in marketing, advertising, and promoting their
Sleep Number products across many media. Publicity included “rankings in
industry magazines, positive reviews in Consumer Reports, celebrity
endorsements, and numerous mentions in magazines, newspapers, online,
television programs, and comics,” as well as other pop culture references. It
claimed over $10 billion in sales since 2010, and that in 2012, “Sleep Number”
achieved 21% unaided brand awareness and 75% total awareness.

Defendants disagreed, arguing that this wasn’t enough for
fame, since unaided brand awareness for the “Sleep Number” mark achieved under
20% awareness from 2001 to 2011, reached a high point of 21% in 2012, and
hovered around 12-13% from 2007-2009. The court declined to resolve the battle
and would let the jury decide.

Unjust enrichment went away as a separate claim because Select
Comfort had an adequate remedy at law.The Minnesota Deceptive Trade Practices Act claim survived, however,
because it might provide a separate basis to calculate damages.

Finally, the court dismissed a counterclaim based on Select
Comfort’s purchase of competitive trademarks as keywords.Select Comfort acknowledged that the keyword
purchase alone wasn’t infringing or unfair competition.“What Plaintiffs do contend is that
Defendants’ purchase of the keywords in conjunction with the resulting
advertisements is wrongful.” This is an
excellent limitation and I hope more potential plaintiffs pay heed.

Wednesday, January 13, 2016

The facts of Swisher
are colorful (a murder trial, at which he was not the defendant, is involved) but irrelevant.United
States v. Alvarez, 132 S. Ct. 2537 (2012), invalidated a statute
prohibiting lying about being awarded military medals.Reversing circuit precedent, the en banc
court here also invalidated a prohibition on wearing such medals without
authorization.Since the statute has
been amended to remove the mere prohibition, this particular issue won’t come
up again, but the First Amendment analysis is of interest for trademark
purposes.

Under Alvarez,
false statements aren’t for that reason unprotected; punishment is confined to
particular contexts.The plurality’s
exacting scrutiny required (1) a compelling government interest; (2) that the
restriction at issue was necessary to achieve; (3) and that there was a direct
causal link between the restriction imposed and the injury to be prevented.(Question: what work does (3) do?Is there a case where the restriction would
be necessary but there was no direct causal link between restriction and
injury?)Here, though the interest in
protecting “the integrity of the military honors system” was compelling, the government’s interest
could be satisfied by counterspeech, including a “Government-created database
[that] could list Congressional Medal of Honor winners.” The government also
failed to prove “its claim that the public’s general perception of military
awards is diluted by false claims.”

Justice Breyer concurred, using intermediate scrutiny.He would (1) take “account of the seriousness
of the speech-related harm the provision will likely cause”; (2) consider “the
nature and importance of the provision’s countervailing objectives,” and (3) weigh
“the extent to which the provision will tend to achieve those objectives, and
whether there are other, less restrictive ways of doing so.” Other statutes punishing false statements were
more acceptable, he found, because they typically “narrow the statute to a
subset of lies where specific harm is more likely to occur.” Breyer noted that a more limited statute could
have adopted these requirements by (1) requiring a showing that the false
statements caused a specific harm, (2) requiring that the lies be made in a
context “where such lies are most likely to cause harm,” or (3) focusing on the
more important military awards that Congress most values.

Previously, the 9th Circuit held that Alvarez didn’t control the false
medal-wearing statute because the statute regulated conduct, not speech.Thus, it was more akin to (ok) impersonation
statutes or statutes prohibiting “the unauthorized wearing of military
uniforms.”Under O’Brien’s test for regulating expressive conduct, the government
had “a compelling interest in ‘preserving the integrity of its system of
honoring our military men and women for their service and, at times, their
sacrifice.’”The government’s interests
were “unrelated to the suppression of free expression” because the statute
“does not prevent the expression of any particular message or viewpoint.” And
third, “the incidental restriction on alleged First Amendment freedoms” was “no
greater than is essential to the furtherance of that interest,” because, “even
if § 704(a) is not the most effective mechanism, in at least some measure it
promotes the goals of maintaining the integrity of the military’s medals and
preventing the fraudulent wearing of military medals.”

The en banc court reasoned that, if a law suppresses conduct
to regulate the communicative nature of that conduct, then strict scrutiny
applies, not O’Brien.Under Reed,
if “a regulation of speech ‘on its face’ draws distinctions based on the
message a speaker conveys,” it is a content-based regulation. This was exactly what the law here did.“Wearing a medal, like wearing a black
armband or burning an American flag, conveys a message.”The law was designed to stop a particular
message: “the misappropriation or distortion of the message of valor conveyed
by a medal.” Thus, O’Brien didn’t
apply.

Under Justice Breyer’s concurring opinion in Alvarez, the law here failed as well,
lacking the same necessary limiting features that other laws against false
statements have.The government said
that this law was like the Lanham Act’s ban against trademark infringement,
since it prevented “misappropriation” of government property.But Justice Breyer rejected a similar argument,
albeit incoherently; trademark law focuses on “commercial and promotional
activities” and requires showing likely confusion, which makes it more likely
that the feared harm is involved.

Circuit precedent said that “[t]he use of a physical object
goes beyond mere speech and suggests that the wearer has proof of the lie, or
government endorsement of it,” but the en banc majority saw no basis for the
claim that wearing a medal is more probative than speaking a lie. (Citing Kevin
Jon Heller, The Cognitive Psychology of Circumstantial Evidence, 105 Mich. L.
Rev. 241 (2006) (noting, as an empirical matter, that jurors give more weight
to testimony, such as eyewitness identifications and confessions, than to
physical evidence, such as blood and fingerprints).) Given that military medals are freely
available for purchase, “the probative value of owning a medal or other
military decoration is minimal.” Regardless, “wearing a medal has no purpose
other than to communicate a message,” so it was core protected symbolic speech.

Nor was the ban like laws barring impersonation of
government officials, or the unauthorized wearing of military uniforms, which
the Alvarez Court assumed (without
deciding) were valid.Impersonation
statutes typically focus on impersonation, not mere speech, and require
showings that others were deceived.Other laws, limited to false representations in the contexts of banking,
finance, or law enforcement, where “a tangible harm to others is especially
likely to occur,” were distinguishable.

Although the government had a strong interest in avoiding
dilution of “the country’s recognition of [award recipients’] sacrifice in the
form of military honors,” a narrower law, plus a register of awards, could also
serve the government’s interests equally effectively.

Judges Bybee, N.R. Smith, and Watford dissented, and would
have viewed the case as one involving deceptive conduct, not just mere
speech.The dissent pointed to a number
of other now-threatened laws: bans on unauthorized wearing of a uniform of a
friendly nation; wearing of the Red Cross (or related international symbols)
with the fraudulent purpose of inducing the belief that the wearer is a member
or agent of the Red Cross (or related national/international organizations).

The dissent disagreed with the majority that the “quantum of
conduct involved in pinning on a medal . . . is not materially different from
the quantum of conduct involved in speaking or writing.” If that were true, the dissent contended,

then we could save ourselves
trouble and money by simply announcing that we are awarding medals without
actually giving the recipients anything. But as anyone knows who has witnessed
the President awarding the Congressional Medal of Honor or a promotion ceremony
pinning a new officer—or even an Olympic medals ceremony or a Cub Scout court
of honor—there is value, both symbolic and tactile, in the awarding of a
physical emblem. If there is important value in the act of awarding a physical
medal, there is important value in the wearing of it.

Here the dissent is nitpicking about the phrase “quantum of
conduct,” whatever that means.The
majority means wearing a medal is an act in the world that is fundamentally
communicative; speaking and writing also have physical aspects, but the extent
to which that makes them “conduct” is usually zero given why they are usually
regulated, and so here.The dissent says
that the physical act of receiving (and thus wearing) a medal means more than just announcing that
medal, which is also true, but (as is inherent in the dissent’s own
formulation), the act remains almost entirely communicative, with the physical
aspects serving to confirm the communication, just as standing at attention as
the national anthem is sung confirms a communication of respect.

The dissent also would have found that this particular ban
risked less of a chilling effect, because you can’t carelessly wear a medal as
you can carelessly claim to be a medal winner.(Everybody, majority and dissent, would require intent to deceive for
liability here.)There was also less
ambiguity in wearing a medal than in speaking—the risk of misinterpretation or
“censorious selectivity” by prosecutors was less.

Moreover, the power of visuals meant that falsely wearing a
military medal did more harm to the govenrment’s interest than “mere false
speech”:

Even if the wearer is later exposed
as a liar, the utility of the medal as a symbol of government commendation has
been undermined. The public can no longer trust that the medal actually is a
symbol of government commendation …. It is one thing to say that one has been
decorated; it is quite another to produce the evidence for it by appropriating a
symbol that the government, through decades of effort, has imbued with a
particular message. Unlike false statements, which may work harm by giving the
public the general impression that more personnel earn military honors than
actually do, the false wearing of medals directly undermines the government’s
ability to mark out specific worthy individuals, because the symbol the
government uses to convey this message can no longer be trusted. This may also
mean that those who rightfully wear a military medal are less likely to be
believed…. [T]he wearing of an unearned medal offers more convincing proof of
the lie than a mere false statement.

Thus, a medal is like a trademark.[Actually, the dissent is claiming that the
physical medal is like a trademark; apparently the name of the medal is not as
much like a trademark.]“When those who
are unworthy are allowed to wear the medal, the government can no longer
identify its heroes in a way that is easily discernible by the public.”Of course, this harm doesn’t occur “when an
unearned medal is worn for purposes of art, theater, political expression, or
the like.”It’s only when the
medal-wearer tries to convey that he’s actually earned a military honor that
the medal’s symbolic value is diluted.[Under this rationale, it follows, trademark dilution is
unconstitutional, despite the way Justice Breyer tosses around “confusion” and
“dilution” as synonyms.]

Also, the government had fewer less restrictive alternatives
to banning the false wearing of a medal than it did to banning false claims of
military honors.“[T]he fact that the
lie here is told in a more effective way, with physical proof in the form of
the medal to support the false claim of entitlement, increases the harm caused
by the lie and also means that other, less restrictive means are less likely to
be effective.” Counterspeech would be
less effective, because, as the Fourth Circuit held, “speech may not
effectively counter that which a person sees.” Plus, if a person has to check a database to
confirm that a medal was honestly earned, “the purpose of the medal itself is
utterly defeated. If we can no longer trust what we can see, the only honor the
United States can confer on its heroes is a listing in a database.”

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I speak for myself. On this blog, I do not and cannot speak for Georgetown Law, the Organization for Transformative Works and/or AO3.